Bank Accounts – Key Factors to Consider
Bank accounts generally are designed to do the same job, but depending on how you'll run your account, you will be looking for different things in terms of what your account offers.
Credit Interest
If you're not the sort who likes to go overdrawn, then you'll probably be more interested in what amount of interest you can get on your credit balances. Some accounts offer inflation-busting rates of interest, but usually only on a fairly small amount of your balance.
Overdrafts
If you sometimes (or always) spend more than you earn, you'll want to have an account which charges a low rate for its authorised overdrafts. You might also want to look at what rate you'll be charged on an unauthorised level of overdraft as these rates are typically around the 25 - 30% mark, although lower rates are available.
Some accounts charge a regular fee when you're overdrawn, either instead of, or as well as, interest.
To give you a level of protection against overdraft fees and/or interest, some accounts have a ‘buffer' amount. This lets you go overdrawn up to this amount, and you won't be charged. Make sure you understand the terms of this arrangement as sometimes it only covers interest, sometimes only fees, and sometimes both. These buffer amounts may be optional extras, and not automatically granted, so make sure you ask your bank.
Monthly fee
A number of current accounts require a monthly fee. This is normally charged by the bank to fund some other benefit with the account, such as a lower overdraft interest rate, or a higher overdraft buffer amount. If you're likely to have a large overdraft, this may be beneficial to you.
Access to the account
Make sure you choose an account which you can access in the way you need. Some accounts are only accessible via internet and phone, while others allow you to deal with your account through branches and even the Post Office. This can be pretty handy for withdrawing money and paying in cheques.
What to do Next
Now you're aware of all the key things, take a look at the things to watch out for when choosing a bank account, and our bank account guides. Then check out the latest bank account best buys to see the latest rates and deals on offer.
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